Tim Cook Defends Apple’s Tax Strategy on 60 Minutes

According to page B1 of the December 4, 2015 Money Section of USA Today, the top ten U.S. multinationals with large cash hoards that are classified as “foreign reinvested earnings” are the following: General Electric ($119 billion), Microsoft ($108 billion), Apple ($91 billion), Pfizer ($74 billion), IBM ($61 billion), Merck ($61 billion), Cisco ($58 billion), Johnson & Johnson ($53 billion), Exxon Mobil ($51 billion), and Google ($47 billion). With the exception of Exxon, every single one of these companies pays an effective tax rate below the prevailing 35% rate that is the standard federal share of profits before deductions.

This is a topic that generates more controversy than it should. Tonight, when Apple CEO Tim Cook appears on “60 Minutes”, he will receive intense questioning from Charlie Rose that suggests Apple is evading its tax obligations. CEO Cook does not take kindly to the insinuation that Apple is a tax … Read the rest of this article!

An Investor’s Second Competitive Advantage

I have written before that one of the best advantages that an investor possesses compared to the rest of the world is the ability to think long term. If you buy a stock that is expected to grow earnings over five years that would suggest a doubling in value, it is no big deal if nothing happens during the first three years and all the gains come in the latter two. In fact, if the company pays a dividend that you reinvest or repurchases its own stock, this method of delivering value would be preferable since you get an accelerator benefit when earnings growth travels at a faster rate than stock prices.

But there is another advantage that is rarely discussed which a retail investor can harness: the ability to go value investing when a company cuts its dividend due to a natural cycle that the company experiences. I spent … Read the rest of this article!